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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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03:00:00

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San Francisco, CA, USA

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

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480

TOPIC FREQUENCY

Us 26, S&p 18, America 15, China 14, Washington 14, Europe 12, U.s. 12, Avis 8, Simon 8, Melissa 7, Schwab 6, Sandy 6, Athena 5, Harwood 5, Vern Buchanan 5, Jonathan Bush 5, Hong Kong 5, Unitedhealthcare 4, United States 4, Cialis 4,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    January 2, 2013
    9:00 - 12:00pm EST  

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12.25 a share. that's nearly a 50% premium. >> they don't rent horses. >> let's get back to our guest host, doug. you look at something today, the positive reaction from the stock market, you think that's a knee-jerk reaction at this point? >> my view is really nothing changed. from one night to the other. other than there was a big negative expectation going into this move. >> take that off at this point. >> exactly. >> we'll continue to see how the year shapes up. if you are just waking up and tuning in, take a look, because the dow futures are up above 201 points, s&p by almost 26 t. this is building on gains that you saw 166 on monday, big gains before that from the week before. >> as january goes, as the first week of january goes, so goes january. >> happy new year, everybody. join us tomorrow. right now it's time for "squawk on the street."
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>> we start the hour with breaking news. the futures are surging on the news that the fiscal cliff has been averted. welcome to "squawk on the street." i'm melissa lee. first trading day of the new year, poised to begin in rally mode. keep in mind, this is off of the big rally we saw on friday pre-cliff. the biggest gain we saw in the month of november across the board. this, of course, as congress takes measures to avoid the fiscal cliff. take a look at this. this is something you don't see too often on wall street. the dow looking at about 202 points at the open. look at the picture over in the european markets. the optimism has carried over there as well. the dax is higher by 2%. italy up 3.5%. but of course, jim, what a two-day streak of gains we will see here on the market. >> i think that we're set up to
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go higher. i also want to caution -- i don't like to buy up 2%, 3%. that's never been a terrific way to get the year started. there's a lot of money coming in. i do want to be optimistic about 2013, because i felt that what was going to happen was capital gains could go up more, defense could go up a lot more. i was fearful going over the cliff. i can immediately switch to the debt ceiling and be negative and want to cry. but i want to focus on the fact that we got something good that happened. i know no one liked the deal. that's what happens. that's what compromise is about. >> exactly. >> you're not supposed to like a compromise deal. >> i agree. listen, it's a time to be optimistic. i love the tweet this morning that let's put d.c. on the back burner a bit, and put the stock price where it's supposed to be,
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which is future earnings. >> we'll get there in one 1/2 months when the sequester is over, when we'll have to deal with the debt ceiling. president obama has already said he will not negotiate op the debt ceiling. these are huge issues for the market. we're staring down the barrel for the past two sessions, you have to wonder as a trader, what do you do with this gift that you've got at the beginning of the year? do you sell this? >> don't trade it. >> don't trade it? hold? >> s&p up 16% last year. traders didn't get that gain. they didn't get the dividend. they went all about this risk on/risk off nonsense. i will stamp this stuff out in 2013. i'm steam rolling. >> are we forgetting about the fed essentially giving away free money for the next few years? >> so go buy some gold. >> all right. let's get more on the fiscal cliff deal that was struck on capitol hill. there are a lot of nuts and bolts inside of that. cnbc's chief washington
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correspondent john harwood is here. i guess we can leave out the aid to the asparagus farmers part. >> we can leave out that part, brian. i'll go through all the details with you. as you guys were accurately pointing out, everybody hates it, because nobody really got a great deal out of this. and we're right back in the soup with more negotiations over the next couple of months. first of all, on the income tax, you've got taxes going up to the clinton era rate of 39.6% on incomes of $400,000 for individuals, $450,000 for married couples. on the estate tax, the inheritance tax, you see that going from 35% to 40% on estates of $5 million. although the value of that exemption is indexed for inflation. you see on capital gains and dividends the rate going from 15% to 20% on those top earners. now, secondly, you see a round of other changes, you see on the doc fix for medicare. you prevent the decline in
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medicare payments to medicare providers. you extend unemployment benefits for a year. you see that the payroll tax does not continue. that is going to be a tax increase for average families. those are some of the details that we've got on this bill. but it does not deal with the debt ceiling. it does not put off the sequester indefinitely. the -- it's only for two months we put off the sequester. so we're going to have to see how that is resolved. the alternative minimum tax was also permanently fixed. that's very expensive, because it protects tens of millions of families from having their incomes go up because they would be subject to that amt, which was always intended for what president obama likes to call millionaires and billionaires. >> john, what are the biggest surprises that we can take away from this? i get your point nobody's going to be happy. as you tweeted out last night, that is the essence of any deal. you'll have to leave something on the table on both sides. any real big surprises that have
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come maybe in the fine print of this thing is this. >> not really. you know, this is a least common denominator deal. because it doesn't fully settle the revenue question. the president said the other day, i'm going back for more revenue. that ensures another bitter fight. it doesn't take care of tax reform, it doesn't take care of entitlement spending reform, doesn't take care of the debt limit. all those things means we're going to have a brutal couple of months of fighting. and this is a baby step forward. it does satisfy the president's belief that we need more revenue to run this government at the level that the american people want, but not as much as he thinks they need. and, you know, analyses against what had been current law before this passed show that the deficit is going to be a lot bigger. of course, that's why we avoided the fiscal cliff, because people were staring in the face that the amount of deficit reduction they thought this economy
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couldn't take right now. >> hey, john, does this whole battle change the political swing of power, balance of power as we go into these rough couple of months into the sequester? i'm just wondering, because guggenheim came out with a note that it's raising the odds of a default on debt from 20% to 10%. they said the brinksmanship we saw in this level and what the republicans have on this fiscal cliff. >> republicans say they have leverage on the debt ceiling. the president says forget about it, i'm not negotiating with you. one of those positions is going to have to give. and we'll see. i think it is logical to say that the odds of a default have risen to some degree because that issue's not been taken off the table. i don't think it fundamentally changes the balance of power, melissa. the president is on the side of public opinion on most of these issues. republicans are on the short side. they've got control of the house and he needs cooperation with republicans not only in the house, but also to get things through the senate.
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even with the stronger democratic senate that we're going to get when the new congress convenes on thursday. >> john, jim cramer. in april of 2011, the president said, look, i don't really believe in a constitutional challenge. perhaps what we call a 14th amendment section 4 challenge. but this is a new president who is emboldened. this was never meant to be something that says the government won't pay its bills. you're not supposed to be able to do that. >> well, it's interesting, jim, that you say that, because i have assumed that when the president said i'm not playing that game, i'm not negotiating, that what you just said is exactly what he's thinking of as being in his back pocket. now, the administration has said, however, and i believe that's come from press secretary jay carney, not the president himself, which allows a little wiggle room, that he says we don't have the authority to do that. so would they change course if they find an obstinate
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republican house that will not go along with them. maybe so. that is a big question mark about the early part of 2013. >> john, quick question. listen, you've been doing this a while. you're a pro down in d.c. do you see a more vitriolic fight over the debt ceiling than we just had over the fiscal cliff? >> yes. >> can you give us a reason to be optimistic going into the new year? >> i cannot. >> happy new year, harwood! a week ago i thought everybody's taxes were going to go up. a week ago i thought the capital gains were going up. >> the payroll tax is going up. >> what i meant is -- >> i'm sorry, you're right. >> it's going to pay a lot more. a week ago i thought i would come back here today and say the market's down 400 points because there was no agreement. yesterday i felt that tanner was going to be on my wal of shame because he was trying to pull this fast one. i can completely embrace the
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negative. but up 16% last year, embracing the negative was a sucker's game. i'm not going to play the capital game this year, okay? i'm not. there's going to be capital issues all year. i'm not playing it. it made you no money last year. i'm about trying to make money in 2013. i will not be part of this side show which says that the debt ceiling is now reason to sell stocks. i can't do that. my job is to try to help you make money at home. i'm not going to let you down by focusing only on the fact that perhaps the 14th amendment or section 4 or the republicans can stop it. because you know why? that's not why i was put on earth. i was put on earth to help people make money. >> the question i have, and i was sorting tweeting this out on new year's day, was there was no question tax hikes will hit a group fairly hard. if you make a couple million dollars a year in income, you're talking about a huge tax increase. if you make $500,000, $600,000, you're going to be hit. you're going to spend less or
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save less or some combination. what i want to know is, what exactly will be spent. somebody's going to be hurt. is it going to be toll brothers on the high end of the housing market? is it going to be mercedes-benz? that will come out of the economy somewhere. >> it could have been really a big slowdown. i don't see a big slowdown. i calculated last night how much i'm paying. it's nobody's business, but i can tell you, i had a great run in this country because i got a big tax cut for a long time. i say hallelujah. we get spending cuts now, we're really in great shape to take over this world. but we need medicare spending cuts for it to work. >> are you going to stop spending or spend less on certain areas? >> i would love to cancel my eagles season tickets. >> well, that has nothing -- that's another story. >> it's a very difficult discussion to have, because you don't want to go on tv and say here's what i make. here's my income.
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john and i got into it last week. my wife's got a big job. she's successful. i'm proud of what i've done. we're going to take a bit of a hit. not a huge hit. if the whole thing had kicked in, we would have taken a hit. i said clearly on the air and i'll be perfectly transparent, if we wouldn't have gotten this deal, we would have had to cut back dramatically. because taxes would have gone up from zero dollars to the top. it's a bit more palatable now. i'm going to save as much as i can, spend less. the thing that scares me, i talked to some friends much more successful than me, everybody i talked to said what's going to go is charitable giving. >> wow. you can't do that. >> maybe it's being resentful or bitter or whatever. >> you can't do that. this is one thing, the times are tougher. >> getting back to what harwood -- by the way, harwood, thank you. we didn't say thank you to john harward who's been doing
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yeoman's duty on capitol hill for i don't know how long. he deserves a break at this point. it's going to be more vitriolic says john on this fiscal cliff debate. a lot of people were making the comparison of going over the fiscal cliff to what happened with the debt downgrade in 2011. but i would say that maybe the argument about spending cuts and the debt ceiling will be more akin to what happened in 2011, because that is the very issue. and the s&p -- the downgrade came on this debate over spending. >> one of the great bond buying opportunities. of course, the federal reserve is making the free money you talk about, which is good for stocks. remember, 257 people voted in favor of the deal. the minority has held people hostage. i don't understand what the president, other than the constitutional challenge, is saying not negotiate. i think everybody in this country recognizes -- senator corker, such a voice of reason. medicare is out of control,
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social security is very expensive. they will have to be taxable. >> we have 1-plus trillion in deficits. this will raise $60 billion. 5% or 6% of our problem. i've been on the record of saying let's get through this deal, just so we can now focus on the stuff that actually matters. >> thank you. >> the average single income household will extract six times in medicare and social security what they pay in. solve that. >> yeah. >> and based on what you said about the debt ceiling, i believe the rise above campaign will still be in -- >> that's going to go on for a long time, brian. >> full effect. because it's going to be more vitriolic, to harwood's point. >> what happened in 2011 to the markets, i understand that markets for many people out there who are watching are long-term vehicles, it gets very difficult to stomach these roller coasters. we're seeing right now, it looks
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like a huge open today. we had a 2% rally on friday. and then, what, you're thinking down the road in two months seeing a huge sell-off possibly? because we have to argue in d.c. with as much vitriol than what we saw in the past debate. >> if you make $700,000 a year, are you not going to buy a new ipad because your taxes go up $1,000 a month? yes or no. >> probably not. >> in 2011, 19% decline. boom, you had october 1st, october 8th. you missed the whole move back up. i'm determined to get people to like companies, own stocks, buy them as they come down. washington creates a problem, because it's worked so many times. it's worked so many times. >> yeah. got to take a break here. coming up, find out what this fiscal cliff deal means for the health care industry. jonathan bush will join us live at 10:45 eastern time. plus what's ahead for the banks, now that a fiscal cliff deal is in the books.
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let's look at the futures. this is a big open we're looking at for this first trading session of 2013. the s&p 500 looking to add 25 at the open.
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take a look at this. the dow looking at 194 points at the open. the nasdaq looking at 58. the s&p up 25 points. this will be a very big day on wall street. at least at the open. of course, there's always been a positive first day of the
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trading of the year. >> it will be up. >> we have been up the past four years. >> a lot of money comes in automatically. >> and i love your point, jim, about international. because we have been the cleanest dirty shirt in a bag of laundry for a while now. europe's got problems. ask any high-end realtor, who's buying the homes in manhattan, who's buying the homes in florida. brazilia brazilians. >> the cleanest dirty shirt, but the market returns around the world have been higher than ours. >> come here and buy up all of miami. >> on that basis, sure, we can go to the stock market and make 600%. >> come on, you can't compare the dax to botswana. >> remember the deutsche was supposed to be reissued? that didn't happen. did you ever try to go up against the germans when they want your real estate? >> nobody wants -- i'm trying to
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get rid of the one house i own and i probably couldn't if i wanted to. >> tip it. >> don't know what you have. >> you know what the long-term obligations are. shares of zipcar, agreeing to be bought by avis budget group for $500 million in cash, or $12.25 a share. that, my friends, is a nearly 50% premium over monday's close. not only do we have a deal to start the year, but it's got a fat and juicy premium. the internal motto, everything's fine. >> where does faber say it's not a wig deal and it's not important. just kidding, david, i love you. >> he just had to drop out of his hula lesson because you said that. >> i thought he was in zumba. look, there are very few players left in this game. rates are going up dramatically for rental cars. it's a fabulous business. i have liked hertz.
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don't forget, sandy wiped out a lot of cars. this sa remarkable deal, only because one more time another player gets taken out. this business is too consolidated. and the pricing is ogolopistic. >> it's a nice premium. if you're a hertz holder, you have to why hold the stock that's down 39% last year. these are just things to consider. >> the bigger question, too, is, and i'll play the role of david faber, although i'm not as toned and fit as he is, and i'm much taller, what is -- >> that's a bit of a dig there. >> no, it's not. he's more fit than i. what kind of m & a is it going to be this year? >> i don't think budget, that ceiling is going to put a lid on buys. one of the reasons is because exactly what you talked about
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with europe. they're going to come here. they're going to buy. it feels like '87, '88 when they came with boat loads of money. >> and china. >> china's the new japan. >> i like that. >> if we have a demographic profile, they'll be the new japan. >> not to fear, cramer is back and ready to go. "mad dash" is coming up next. futures up almost 200 on the dow it looks like. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan. tdd#: 1-800-345-2550 with the new global account from schwab, tdd#: 1-800-345-2550 i hunt down opportunities around the world tdd#: 1-800-345-2550 as if i'm right there. tdd#: 1-800-345-2550 and i'm in total control because i can trade
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a les than six minutes to go before the first opening bell of 2013. time for the first "mad dash" of the year with jim cramer. retail focus today, let's start with target. >> i think that the -- all of chatter about target is it's going to miss the quarter. i think this is really important. why? because i think this holiday season was very weak, brian. you talk about who could be hurt, high-end spending perhaps by the tax code. i want to emphasize that those last few weeks before christmas were not good. >> so we'll focus on that. jeffries downgrading. citigroup making a call here. another downgrade. >> this is one of the great growth stocks of the year. if i put it through here, you would have seen it like that. ross stores i think is a regional to national player
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doing incredibly well. but it has been faltering, not unlike bed, bath & beyond. this stock is a down stock and it's going up today. do you lighten up on that? i don't think that's a bad bet. >> citigroup saying downgrade that name. urban outfitters, a little more optimistic. >> this bucks the trend. jeffries had been far too negative, they went from sell to hold. i think they had a strong holiday soap. they have new management. become very much house wear oriented. i still think that the house story, homes going up in value, i think even though the stock has been going up, i still like it. >> what a hit here. >> they go target 27 to 6. a record year for the stock. it is way, way down. i don't want to touch this thing. this is a commodity player. >> where was jeffries $20 ago?
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27.6. >> i like that. that equals 21. here's what i say about this. avoid it. >> a lot of retail concern. but still, the bulls getting ready to snort with delight today. the first opening bell of 2013 is just minutes away. we've got a big rally on top. we've got a huge crowd here. look at this crowd. everybody here from chicago and lake forest. lovie smith could be here, we don't know. we're back after this. today, america's lawmakers rise above the fiscal cliff just in time for the markets to ring in the new year. cnbc brings you first day cnbc brings you first day trading action on both
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at a dry cleaner, cnbc brings you first day trading action on both we replaced people with a machine. what? customers didn't like it. so why do banks do it? hello? hello?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello? ally bank. your money needs an ally. ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪
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it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ 2013, a good rally out of the gate. biggest first day gain of the dow 258 points in 2008. there's the big board. abbvie ringing the opening bell.
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this also marks the anniversary of abbott. some enthusiasm there. >> greatest stock market story i've ever heard actually has to do with that. the secretary had five shares in 1930. she worked there for like 60 years. and ended up with millions. never bought any new stock. nice job there with a spin-off. second or third spin-off now with abbott. they continue to grow and grow and grow. >> got to appreciate a company that wants to make money for its investors. >> and employees, too. and they're surrounding us, so we have to be nice. >> apple up 3.9. facebook. a lot of companies are going to
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go up. people come right back in. apple, prevailing wisdom was the stock was going down because things were bad. i don't know. i think the prevailing wisdom should be apple is an inexpensive stock. >> what is interesting here is we're still looking at the market open. the dow is digesting its open as well. the currency markets, open for trading for a lot longer today than stocks. the euro is still below 133, the recent high. it's interesting to see that the risk-on currencies are a bit to the upside. >> watch gold, too. i think gold, 12th year of good performance. >> yes. >> i would emphasize gold should be part of people's portfolios. >> while i don't disagree with you, because i've been wrong on gold two years in a row, silver better performer last year than gold. >> numbers are numbers. i find that the gld is just a
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very, you know, good way, i hope it goes down, the rest of your portfolio goes up. but remember, in the last 12 years we've had deflation, inflation, good control, bad control, but gold is steady because gold is in short supply in the world. >> i thought we were being positive. i'm optimistic for the next year or so. ten years out, different story. oil prices, right? while they've gone up in the last couple weeks, gas prices are down. >> gasoline. >> gasoline. and nat gas remains fairly low. >> nat gas at four-month lows right now. >> let's not underestimate the extra money that it will put in consumers' pockets. >> if we ever want surface fuel for natural gas, we could have a creative way to deal with all our nation's problems. that's not the president's view. negative on fossil fuels, because there's a lot of ways to be able to convert our wealth of
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oil and gas into positives for our country. >> take a look at the markets once again. s&p higher by 1.7%. 24 points right out of the gate. dow up by 202 points and climbing. 1.5% gain there. jim mentioned apple seeing a huge gain in today's session. 3.6%, adding on top of friday's gain. technology across the board -- >> i've got an upgrade today. can we pull facebook up? >> i think they figured out mobil. mobil is even bigger in 2013 than in 2013. i think ever since zuckerberg came into the conference call, we're going to fix this. i think he's quietly building the company we all thought we might have when it went public. >> bank of america, 1206, above the $12 mark. this is a new high here. bank of america, new 52-week
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high. >> "wall street journal" talking about maybe buying that. i think that reilly's banking work is the best there is. "wall street journal." >> what do you think about naming it the large top cap bank after it doubled last year? >> i still like wells fargo. i like key. that's another one. why key? the heartland i think is doing well. while it's been a disappointing name, i think it keeps turning. they became the national bank with 30% penetration on mortgage markets. i think wells could be a better story. but bank of america is inexpensive, i'm not denying that. >> what do you say to the people at home looking at their screens, seeing the huge gains in the markets today, thinking, am i going to miss something in 2013 if i don't get in on the
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first trading session of the year? >> they always give you dips. you have the employment number on friday. >> big economic week. >> there's a lot of money naturally comes in automatically. i never like to chase up markets. that doesn't make me negative. it's not been a great thing. it's always been a better opportunity, than up 200 on the dow. i do remember there has been a bunch of times where the year starts really strong and you get a bit of a pullback. >> let me regurgitate a stat from new year's eve that our viewers might have missed, if they were out having a good time. four times the s&p 500 has been up more than 10% in a year, and down in the fourth quarter. a lot of people are saying, oh, the fourth quarter is weak. therefore, we're going to be weak. the opposite is true. our data team found four times, up 10% on the year, with a down fourth quarter, and 100% of the time we have had a positive next year with an average gain of 12%. in other words, history, my
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friends, is on our side. >> i thought that stat was terrific. our stat team does a fantastic job. kind of like when you're watching espn and they have the number of -- the second and third, and the sixth game of the world series, i feel we're delivering that kind of performance. or, of course, the football stats. >> you mentioned other opportunities later on in the year. when it comes to mortgages, though, you said on today's show, at 7:00 a.m. on new year's day, by the way, you're up. you said lock in now. >> i locked in big. i also did the conversion to the roth. because i was worried about taxes going up. >> that's smart. >> i could always change that. doug earlier talked about changing that. but i locked in. i have a very good credit line. i'm debating locking in on what's left. locked in mexico. >> i locked as well. >> i went to mexico, bought homes. i think mexico's a big turn-around. i think the peso is going to be
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huge. looking forward to your show on friday. the peso might be the greatest currency right now. >> a lot of pesos, my friend. >> i think he's made a deal with the cartels. i think that's going to be the subtle story of 2013. deal made with the cartels. >> i laugh, because i've known you for more than a decade. what about these illiquid markets. i don't like illiquid markets. >> why not? >> they're trash. >> i'm just saying, if you've got the guts, look around the world. jim rogers type stuff. vietnam, laos. >> myanmar. >> go for it, brian. >> burma, north haverbrook. >> other sectors we're watching today, the steel sector getting a major boost from a credit
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suisse. price target for six companies in this group, they're citing the fiscal cliff resolution, of course, and up side in china. they say the channel checks, that there's more reasonable inventory levels. so pricing is better. >> steel intelligence saying this is a very good level. i think letter x has done nothing for asia. i remember when it was $180 stock. i would tell people, again, that the resource based stocks are more china oriented, and i think china's going to have a very big year. remember, the euro is supposed to break up. the brics were no longer brics, they were soft putty. housing is supposed to go to zero. we could go over and over the things that were going to happen, that didn't happen. what did different repd rate go up? 40%? 45%? remember that worry? selling those dividends left and right. >> you could buy walmart with a dividend, pay your 3% mortgage
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and still have cash left over. >> reverse mortgage? >> anyway -- >> you keep your house. be careful. >> is that bid you made on my house still active? >> i changed it to 4050. >> bob pisani is back, on the floor. >> let's hope 2013's a healthy, prosperous year for all of us. we've got a global rally going on. germany at a five-year high. 52-week highs over in europe. france, uk, portugal, greece 52-week highs. 1 1/2-year high over in hong kong. the china people are closed. big rally in coal stocks, big rally in basic materials stocks. what's to like and not to like about the deal with some of the traders this morning here? obviously not to like, no spending cuts is a complete mess. everybody's unhappy about that. but the 2% increase in the payroll tax, bringing it back to where it was. 3.8% increase in medicare tax for the wealthy. phase out of certain deductions.
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a lot of that's going to be weighing on people who make a little bit more money. i was surprised how many people listed the things they did like. here are the most common things they like. the deal overall, marginal positive for consumer sentiment. number two, capital gains and dividends, only at 20%, that was a lot better than we were talking about even just a week ago. finally, i don't think you guys have brought this up, no change in the mortgage interest deduction. that's a major plus there. it remains at $500,000, the maximum you can deduct for capital gains. they didn't even have a big debate about that. it's not an all-clear for stocks. two or three categories i got a lot of comments about, health care stocks, doc fix in there. this sequestration thing that comes up in march has a 2% medicare cut across the board. so that's still weighing on health care stocks, particularly people in that area. i got a lot of questions on retail stocks. this 2% increase overall is
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definitely going to weigh on consumer spending a little bit. although i've seen numbers all over the place. retail, luxury retail, this is a very interesting question. remember, coach and tiffany were down last year, and a big year for retail because of the whole implications of the fiscal cliff and higher taxes. resolving this a little better than people thought. instead of $250,000, $450,000. you're seeing the luxury retailers trading up this morning. the taxes and curbs on deductions are going to be a back door way of curbing enthusiasm for the retailers in the luxury space. this is still being fought over. i'll give you more in the next hour. tax rebate delays, looks like they're going to delay some of the rebates up until february instead of january. $3,000 average paycheck that will go out later. there are some people saying this will be a little bit of a depressing effect on some consumer discretionary names, like auto parts or sporting good
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companies that typically benefit when people get these checks in the mail and go out and spend. most of the guys down here are hoping the sequestration and debt ceiling debate in march will finally force a very focused debate on what's going on with the whole issue of entitled reform. certainly it's going to be focused. let's hope something gets done about it. guys, happy new year to you. >> let's get the bond pit reaction. santelli in chicago. happy new year to you, rick. >> happy new year. and of course, the fixed income markets, especially the safe harbor wonder, they're responding to what everybody is aptly describing as an equity rally, whether it's the cliff, post-cliff rally here, or just a global rally across the international indices. up eight basis points in the ten. open the chart up to may and you can see we're at the highest
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yields. look at everything on a closing basis, since about, what, mid-october. but very close, as you see to a lot of different tops in august and september. the real meat of the comps, looking in the rear view mirror, may. look at the 30-year, very similar. interday up eight basis points as well. these are the highest yields since mid-september. that's a more pronounced move until you get into the meat of may on the comps. i heard melissa lee accurately say, we're below 133. exactly the high today in some of the effects markets. not everybody trades the same high. on the 18th, 19th of december, interday definitely at 133. these fresh highs going back to the end of april. and of course, the king continues to be all currencies against the yen, because we have another, as you see on this chart, fresh dollar/yen high going back 29-plus months. now we'll go to brian.
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>> good to see you, buddy. here's to a terrific 2013. the fiscal cliff deal moving the commodity marks as well. let's go a few blocks to the east and go to sharon epperson to the nymex. >> brian, happy new year to you. in oil and metals, we have brent crude prices rallying, pretty much across the board. when you look at the fact that the fiscal cliff deal was averted, and the risk on among the traders, brent crude prices approaching what we may see is a new technical level. above 112 lds a barrel. the next level to watch is $113.25. the 200 moving day moving average for the first time since september, we're looking at a high since september for u.s. oil futures and even gold prices are moving higher here. continuing this when we've seen 12 straight years for positive gains for the gold market. but traders say a key is the
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close above the 1,682 level. there is a down side to look at, and that is what happened to natural gas prices. natural gas prices hit a high overnight. we've seen heavy volume in a bit of a recovery here in natural gas prices. still, above normal temperatures are forecast for the next week out or so. that could significantly impact the natural gas market. melissa, happy new year to you. >> happy new year to you, sharon epperson. bank of america, the clear winner among bank stocks in 2012. is it the best place for money this year. early movers here on wall street, a lot of big gains right at the open. stay tuned.
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rally on wall street.
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look at the vix. it's getting crushed once again. 1 1560. down 13.5%. on friday the vix had the biggest gain since november of 2011. take a look at the pocket of weakness. if you can even call it weakness. on a huge up day like today, it's worth noting some of these retail stocks are trading to the down side. we're watching macy's, nordstrom's, trading lower. what's your theory? >> numbers are too high. numbers come in, stocks will still go down. i think you're getting an opportunity to lighten up. that group is the group that i think is most plagued by the previous quarter. we're still going to have to deal when the earnings are reported, stocks go down if numbers are good. i think a lot of companies numbers could be high. >> do you think there could be a minor impact?
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the payroll tax holiday is going away. everybody up 2% first paycheck of the year. is that going to be a sticker shock and depress sales at all? or not as much of an impact. >> i don't know. target's down a lot, we mentioned target. but when they miss, they go down. maybe we have a reset. maybe we can look at them again. >> if you refied, gas prices down, nat gas prices down, not for everybody, i get it, because if you're not a homeowner, you don't benefit. but everything will far superseed the 2% payroll tax increase. >> look through the last quarter. i think numbers will come down aggressively. i don't feel that way about a lot of other segments. i think people are going to raise numbers for banks. >> i think that when you look at the holiday shopping environment, i think that not only was 2012 a tough year, you look at newtown.
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it was hard to say, i'm going to go out now and shop till i drop. >> and sandy. >> and sandy. you had all these things sort of made you reflective, at least my own family and friends on what maybe matters. you didn't have that mood of, let's go fill up the bags, right? there's a lot more "squawk on the street" coming up. do not go anywhere. coming up, now that the new year is here, did you make any investment resolutions? it's not too late to let cramer help out. with six stocks in 60 seconds when "squawk on the street" returns.
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in the next hour of "squawk on the street," we're going to go behind the fiscal cliff deal and talk to aetna's ceo about how it's robbing medicare, hospitals in order to pay medicare doctors. we'll look at your strategy. remember how we rallied on monday? what do you do with your
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investments now? we'll look at the super rich in particular and how they will fare as the deal goes through on capitol hill. brian, back to you, good morning. >> simon, good morning. time for "six in sixty." >> in puerto rico, the new high end. i think it works. great hotel, by the way, marriott. >> linked in. >> this is the one that is a great performer. i wonder whether we see a little pause. the strongest of the group. >> a couple of calls here. let's start with bc marine. >> a real call. boats are insured. and sandy is going to mean a lot more boat sales. >> high end, do they worry about boat sales? >> if they've got insurance. this stock has become a whipping boy. i think this is very important. i believe the quarter's going to be strong. >> probably the best performing home builder stock in the last year getting a caught.
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>> this one has levitated. >> kinder morgan parts. >> these were going to be killed in the tax reform. didn't happen. that whole group is soaring today. >> mad money tonight. >> a name that could be one of the best. can't reveal it here for 2013. and i'll have a technical analysis of the s&p. >> one of the best performing names of the year. tune in to find out what it is. the latest on the fiscal cliff and what it means for your market strategy in the new year ahead. jonathan bush will join us to tell us what this deal means in the health care industry. a .9% tax above $250,000 for obama care kicking in right now. this morning, i'm going to trade in hong kong. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan.
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construction down .3. we were looking for up half a percent, maybe more. last month is up 1.4. shaved exactly in half. up .7. we have a bit of a bounce from 49.5 december ism, 50.7. arguably a few tenths better than expected. just to give you some idea, 49.5 unrevised, which they usually are on the ism, lowest since july of '09. if you look at october, 51.7. there's your comp on the 50.7. so better than expected. but still hovering awfully close to 50. prices paid much higher than expected, 55.5. we're looking for 51. and we're coming off 52.5. simon, back to you. and happy new year. >> happy new year, rick. and yet that was in the face of the fiscal cliff. so you might have expected a deterioration. but you don't. >> definitely better.
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now it's just a question of trying to deal with how everything in the cliff, the higher tax rates, how these are all going to figure into economic horsepower and jobs. even though tomorrow and friday, we have some jobs numbers coming out that will probably be a little too early to judge the effects. >> rick, thank you very much. >> let's take a look at the markets. major reaction to the fiscal cliff being averted. at this point, the dow is posting its biggest first-day gain in many years. the biggest gain was 258 points in 2008, in the past four years. we're above that with a 265-point gain. the nasdaq highest interday gain in six months. a number of subsectors reaching 52-week highs or more. defense for one. averting for now the sequester. the defense index adding a 52-week high. and i think you mentioned the transports, too. >> the transports are at a multi-year high. and the dow has not fallen on
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the first trading day of the year since 2005 when you were 8 years old, melissa. >> i wish. >> on the back of 166-point rise we had on monday late in the session. a very bullish day for risk assets. so if you're just tuning in, the house has passed the senate bill, or passed it last night, to avoid the fiscal cliff by a vote of 257 to 167. extends the bush era tax cuts for those making less than $400,000 individually, $450,000 for couples. our chief washington correspondent john harwood has more on the other details of what was quite a lengthy bill at the end of the day, john. >> there was a lot in it, simon. good morning to you. happy new year. let's talk about the elements of the deal, run through them, first of all. as you mentioned, on income taxes, 39.6% for individuals at $400,000 or more, 39.6% for
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couples making more than $450,000. the estate or inheritance tax, 40% on estates of $5 million or more. that's up from 35% on capital gains and dividends, rises to 20% for high-income earners. secondly, the alternative minimum tax, which would have hit tens of millions additional families has been adjusted for inflation, so they're protected. unemployment benefits extended for one year. payroll tax cut, which had been benefiting couples making $150,000, by $1,000 a year, has been allowed to expire. that was a temporary measure. so they lose that money. that's a drag fiscally. in addition, the deal blocked the scheduled decline in reimbursements, 27% cut in medicare payments to doctors for a year. it delayed the across-the-board indiscriminate cuts set up by congress for two months. that fight is ahead. so is the fight over the debt
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ceiling which is also not addressed in this legislation. so the bill does a significant amount of things, but it's only a baby step, and we've got big, big fights ahead, guys, on spending, more on taxes, and on the debt ceiling. >> obviously it's an extremely political situation. that's a vast understatement. on the one hand, obama retreated, because the tax rates only go up on those earnings $400,000, $450,000, rather than $250,000. but the republicans did not get substantial spending cuts. they did not get, john, entitlement reform. is it fair to say that the white house outwitted the gop through this process? >> you know, i'm not sure. the white house would love for people to reach that conclusion. i'm not sure that's true. as you mentioned, they had a scheduled very large tax increase all the way down to that top rate, all the way down to $250,000 incomes that would have happened had nothing taken
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place. they accepted much less from that. they accepted less than half of the revenue that the president had requested in his negotiations with the hill. and now they're going to have to go fight for more revenue. everybody gave up. everybody finds things they don't like in this legislation. as you mentioned, no tax reform, no entitlement reform. we've got big, big fights ahead. >> john, i know we just got through a huge hurdle, and we crossed it. what's the time frame? congress will adjourn and then it will reconvene, and then are we going to be sitting here february 28th, much like we were on december 28th, wondering whether we would cross the line for the sequester cliff? >> sad to say, melissa, yes, we are. we'll be looking in late february at the sequester. and also at the debt ceiling. because even though the united states government was on track to hit its debt ceiling, as the secretary geithner said, at the end of 2012, he's got a couple of months of wiggle room.
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but only a couple of months. so all of these fights are still ahead of us. and as the president said, when he was doing a pep rally for this deal the other day, he's coming back for more taxes as well. >> i guess the question is, how urgent do you think congress is looking at the next set of problems? are they ready to roll up their sleeves and get back to work, or push it to the very end like we saw them do with the fiscal cliff? >> i think the smart bet is they may be rolling up their sleeves, but they're not going to get it done until just before the deadline. >> a huge relief, the dow is up 261 for the moment. thank you very much. >> let's get more insight on the economic data out a few moments ago, and maybe a little bit more on the cliff. senior economic reporter steve liesman joins us now. >> very disappointed in that harwood interview, i've got to tell you. >> why? >> well, if he could do his job better, tell me what's going to happen with the debt ceiling,
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then i could do my job better and tell you what's going to happen with the economy. you get the wishy-washy answers, i don't know what's going to happen, and you let harwood off the hook there. how am i supposed to do my job? >> he did say we'll probably be dealing with these issues up to the next deadline. >> but give me some numbers, melissa. let me give you what i think in here. what wall street has baked in, what the economists have baked in is about a 1% to 1.5% hit of fiscal drag this year, after this deal. with the big unknown, you'll see on the bottom here. so the payroll tax cut that john described was a half a point. that's going to be a drag, because you're going to take away spending, especially from those people where when they get tax cuts, they spend it a lot. the wealthy, i'm estimating 0.1%, 0.2%. health care tax, 1% hit. previous spending cuts, budget control act, 0.1%. the sequester, i don't know,
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call it 0.2% to 0.5%. goldman thinks it's pushed ahead. mora comes back and says, you know what, all of this is going to drag on uncertainty. we expect businesses and consumers to remain cautious until these issues are resolved and the financial markets will remain vulnerable. guys, here's the number i think you want to look for. this 1.5% number is sort of built in among goldman sachs. most of the big houses that built some sort of fiscal drag. we've been dealing with a 1% drag for the past four years or so. what does that mean? it means bottom line, still about a 2% economy going forward, unless we do more or less when it comes to the fiscal drag. and then the big debate. how much do deficits matter in and of themselves. and how much is the uncertainty over how we deal with deficits. how much does that matter. >> steve, i'm sorry, i've got to jump in. one quick question. given that we're seeing payroll taxes going up, 77% of americans
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will pay more, we've got a different environment. do we then ignore the old data, and basically reset, kind of like baseball pre-steroid issue, right? is the old data now not worthless, but tweaked? >> when you said the old data, i'm not sure which one you're talking about. >> i'm talking about data with tax rates with payroll tax cuts intact. >> -- that was pretty much built in. i'm talking about -- i'm trying to figure out, brian, here, and we don't want to talk about different things, but maybe we are in the sense that, i'm trying to figure out how much of the fiscal drag this year is built in. most economists expected the payroll tax cut to go away. that was essentially built in. and when i say wall street economists, i kind of take that as a proxy for what investors also expected. if you were expecting the payroll tax cut to continue, you were probably badly informed and not really following the news flow. that was mostly expected.
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the unemployment insurance expected to continue. that gives back some to the low-income end of the spectrum. they don't exactly offset, but those are out there. >> you made me smile when you used the expression, fiscal drag. we are still in this country going to run a massive budget deficit. what will it be, 4%, 5%, 6% of gdp? there isn't a fiscal drag here. this is still a massive stimulus budget that they'll go through. this country is still massively living on borrowed money. there isn't a fiscal drag. >> the cbo send it will end with the deficit deal. but you understand how we calculate -- >> i understand. but it depends where we draw the benchmark. >> in the prior year, in the prior quarter, at an annualized rate. >> in terms of fiscal drag, it could have been an awfully lot worse. they could have just -- i don't know, they could have only did $250,000 for people. i don't know. >> i cannot, as usual, argue
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with your supreme logic there, simon. >> i thought i would point it out. >> you should point it out. i'm just talking about the expectations about the wall street economists talked about it. >> if you look at what simpson-bowles said, we knew this was coming for a year. it was set up to deal with the long-term problems that we had. it should have forced all those politicians to deal with the debt. they have failed. on what simpson-bowles called it a magic opportunity. >> they call it a missed opportunity. i know you're going to hear from robert frank later on the day of the impact on the wealthy, i'm not sure it's done, simon, in what taxes the wealthy will pay in this country. >> obama insinuated when he addressed everybody on monday -- we're out of time, steve. talk later. thank you very much. steve liesman. >> thank you. >> what an exchange. wow. >> that's the new year love.
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>> that was fiery. i like it. i like that, that's good. interlek actual sparring. healthy. >> the big rally, look at the big rally on the first trading day of 2013, post-fiscal cliff deal. executive vp officer. happy new year to you both. art, i'll start off with you. we've had two huge rallies, one to end the year, one to start the year. what do you make of this market move? >> i think a couple things, melissa. i think it's obvious we spent the month of november and december ignoring a lot of good news. we ignored better news coming out of china. good news, constructive news out of europe. certainly better economic data in the u.s. as we waited to see how the fiscal cliff would unfold. we've got half of the fiscal cliff dealt with. i think the market is reacting in an appropriate fashion. because we're halfway home. we've seen that there is middle ground between both sides of this argument, that we can get something done here. so i think what's happening now,
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pent-up demand for stocks, coming back into the market. we're seeing that again today. we're also going to have to listen to things, the sequestration cliff is the next thing we have to deal with, along with the debt ceiling. i think we'll be talking about over the next two months until we resolve that. >> jack, i would argue maybe we're a third home, or something to that effect, because the more vitriolic debate will be over the debt ceiling, and spending cuts, won't it? already both sides have dug in their heels and said, you know what, we're essentially not going to negotiate. each side wants something and they don't seem at this point to want to give in, given the compromise they've made on taxes. >> it reminds me of the beach boys song, let's have fun, fun, fun until daddy takes the t-bird away. it's all tax hikes, no spending cuts. as steve mentioned, the cbo did intimate that the deficit is actually going up over the next ten years, $3.6 trillion. nothing has been done.
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and nothing's been done on debt. nothing's been done on entitlements. we just have this, you know, push this out two months and have the same contention all over again. >> if it's so stim la tory in your view, why is your s&p target for the year virtually where we are now, at 1,500? >> we've put a 1,450 on the s&p for 2012. today is just in my view the follow-through of 2012. i had expected some spending cuts in the negotiations. you know, the payroll tax will take a little bit out of growth. but i'm expecting roughly 3% revenue growth out of the market next year. you know, at a 1.3 times price-to-sales ratio that gets us up to about 4%, 5% price growth and another 2% for dividends. i'm not expecting a lot out of this year, but i do want some adult behavior. we do need to start narrowing
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this deficit. and right now, you know, it's really a push. i didn't see really much of anything happening, except a squashing of the headlines and stock market. >> the leadership as we know is an oxy moron. bottom line, art, are you changing any of your forecasts for the market based on this deal? >> no. based on this deal, the deal's not done yet. brian, i think that's the point. i think we've handled the revenue side of this and we've seen that there is middle ground. hopefully there's middle ground on the spending side of this, and we can get something done in the next two months. i think that would be a positive move forward. i think it will be a 1.5% drag on the first half of 2013. you look at things like the fact that we had a lot of tax winners sold at the end of last year. they probably get bought back in the first half of this year. dividend taxes aren't going up as much as expectations had
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been. the dividend play is probably a sound objective in 2013. but in terms of overall, we still like technology stocks heading into '13. i think that's going to be your leadership. financials have done better, but we still haven't written all the rules for that sector. over the next two months we'll learn a whole lot more of what things look like on the spending side and that will probably set up your spending plans for all of '13. >> you're less excited about the prospects of 2013. i see at the end of your notes here, you say, we also can't rule out a u.s. or a german sovereign downgrade. are either of those scenarios in reality? >> oh, yeah, i mean, well, they're a reality, whether or not they're a nightmare or not, i don't know. keep in mind, interest rates have declined pretty precipitously sin the s&p downgrade. whether or not it turns into a nightmare, who knows. >> guys, thank you very much for your time. happy new year. art and jack. >> thank you. >> thank you. >> still ahead, we'll tell you
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the two big tax breaks in the fiscal deal cliff. and the fiscal cliff deal that could help the housing sector. later, jonathan bush will join us, the chairman and ceo of athena health. live from washington. stay with us. mine was earned off vietnam in 1968. over the south pacific in 1943. i got mine in iraq, 2003. usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection, and because usaa's commitment to serve the military, veterans and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve. and only hopes to achieve them. so you'll be happy to know that when it comes to your investment goals, northern trust uses award-winning expertise
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congress said yes to a deal to avoid the fiscal cliff. but what exactly does it mean
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for home builders and home suppliers. cnbc's diana olick runs us through the details. >> good morning, simon. a win, no question. housing stocks are rallying as the industry breathes a huge sigh of relief. the housing index up over 5% just since the open. the home builders had a dip on fears of the fiscal cliff, after rallying through much of 2012. it's not just the builders, but the building suppliers. even lowe's and home depot seeing gains this morning. why? well, first, the fiscal cliff deal did not touch the mortgage interest deduction. while there may be more to come on overall tax deductions for higher income americans, this sacred cow of the housing market so far remains intact. builders and realtors alike warn that taking away this deduction could stall the housing recovery, despite still record low mortgage rates. second is an extension of tax relief on debt forgiveness.
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this is huge. because making debt relief taxable would completely have stalled short sales and principal reduction loan modifications. banks completed over 13,000 of these modifications in november alone, according to amherst security. a 52% jump since september. 98,000 short sales that were finalized in q-3, according to realty track. these short sales and modifications, have been the foundation of the housing recovery, and helped put a bottom on home prices. so again, a huge sigh of relief these are no longer at risk. brian? >> diana olick, thank you very much. coming up when "squawk on the street" returns, averting a fiscal disaster here in america, at least for now. what does it mean for the banks? are some financials better looking than others? we're looking at the bank trade coming up. as we head to the break, let's take a look at the markets here. it is a global rise of the dow.
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averting a fiscal cliff. let's get to the "money in motion" section of the program. global head of currency strategy is joining us this morning. >> good morning. >> do i make more money on the euro orien at this stage? >> i think the yen has obviously had a big move over the last three to four months. i think we're in a bit of a consolidation phase. i think we've had a plus 10% move and you want to be a little bit more careful. >> where would you head to? >> i think dollar versus the american market currency is probably the best play. i think even the euro/dollar has an upside. i think there's a risk compression trade that's going on. you can see it in the euro bonds, compressing even further. that's driving the euro higher. i think that has a little bit further to run.
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so i would actually look to see if we could get a squeeze higher. if it gets short around 134, i think that would be a good level to go short. euro growth is still weak. once the risk compression trade has run its course, i think it will be that trend taking over again. so around 1.34 i would sell again. >> as you look into 2013, do you see a european crisis? do you see the ecb essentially having to come into the markets? was angela merkel right it will be tougher for germany than 2012 was? >> i think growth remains very, very weak. therefore, i think during the course of the year, ecb will be forced to take additional steps. that will drive the euro gradually lower. >> gradually lower, but not a crash. >> not a crash like we saw in the summer. >> interesting. thank you for your time. >> thanks so much. >> for more currency trades, be sure to catch "money in motion" on friday at 5:30 with melissa.
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the first trading day of 2013. a major rally under way. the ism manufacturing index rising more than a full point to 50.7 in december. as you'll know, reading above 50 indicates expansion in manufacturing for the third time in the past seven months. that was in the face of the fiscal cliff. all 30 dow components are on the rise this morning. hewlett-packard, the biggest gainer, up more than 5%. some of the retailers are missing out on today's rally. macy's, kohl's, abercrombie & fitch moving lower. >> let's look at the markets here. there are a lot of records being broken in today's session. the biggest first day gain in at least five years. the dow is higher by 258 points. a little off the session highs. the s&p 500 also adding to gains from monday's session up by 2 percentage points, or 28 points. the nasdaq, hands down, the best performer of the three major indices.
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good for a gain of 2.5%. in terms of some of the subsectors we're watching, these are some amazing moves that we're seeing today. russell 2000, an interday record high here. >> i'm glad you brought that up. because oftentimes we do a disservice by focusing on the big caps. they're heavily opened, widely traded. small cap stocks have outperformed the mid caps. there are so many names inside this market, that we wouldn't even cover, maybe $400 million market caps that have doubled or tripled in the last 12 months. literally every asset class is up. i know people say the higher tax rates, i get it. the federal reserve just keeps priming risk assets. and intends to do sor to a couple years. >> let's be clear here. the federal reserve is printing money massively at a time as we've just gone through a deal on the fiscal cliff, you'll get more stimulus into the u.s. economy. you've got a rally and risk ass
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asset. >> as a trader friend of mine said this morning, between the fed, the president and congress, washington is a giant candy store. it used to be, and we're not that old, melissa, i know we've all been doing this for a while, it used to be a couple of years ago before the fed aggressively started buying treasuries, when the bond market felt things were out of whack fiscally, the vigilantes would come in and move hundreds of billions of dollars around, interest rates would move and we would see a policy change. the bond vigilantes, they are powerless, because the fed, you don't have that opposing force to washington anymore. >> the fed is buying treasuries? >> that's right. >> monetizing the debt of the federal government. >> the sectors we're watching, financials the highest levels of march 2011. materials highest since july of 2011. consumer discretionary, trading at a new record high. although we're seeing weakness on the part of individual retailers, macy's, ross stores, kohl's, just to name a few.
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that is a pocket of weakness, if there is one, to point out in today's huge rally. >> i have to also mention the data in china is good overnight. >> meantime, a few analysts out with comments on facebook today. julia boorstin joining us. things getting positive from the analysts' community. >> it looks like a happy new year for facebook. jpmorgan raised the price target to 45. on confidence it will grow revenue for mobile users. william blair, pricing has the potential to triple. facebook's biggest bear, bmo analyst daniel salmon, to outperform doubling his price target. he sees it accelerating on better ad tools. cowan is more cautious on concerns about market share. the company initiated coverage at a neutral rating. >> julia, thank you very much.
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still ahead, taxes going up for households making more than $450,000 a year. why the wealthy may end up better off with the deal. but up next, health care reform and the fiscal cliff, athenahealth. this is $100,000.
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the markets continue to surge higher this morning on news of that fiscal cliff deal. but what should investors do with this rally? let's bring in oppenheimer's chief investment strategist. happy new year, john. >> happy new year. >> history says this day tends to be positive. is today a better indicator of the rest of the year or just a one-day wonder? >> i think it's a better
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indicator of the rest of the year. we've been positive on equities for quite a while now. and have enjoyed the rally from june 1st through the end of the year basically. at this point, we continue to be positive on equities. we like cyclic -- >> slowdown, higher tax rates among the wealthy who may be the investing class. make the case. >> the case is, an economic recovery that is in progress, that is likely quite sustainable as a result of the fact that most people will not get hit with draconian tax hikes at this point, based on what we saw last night. we've got housing positive, autos positive, manufacturing positive. services positive. monetary policy that remains decidedly supportive. and around the world, evidence that china indeed did not go through a hard landing. we didn't expect one, and we're very pleased to see that the
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transition that is occurring is likely to see some stimulus, when the new leadership gets back after the lunar holiday, when they go to beijing with the audi 6s in march. what we would expect to see is stimulus there, that will not only feed the domestic economy in china, but feed into the global economy. and europe is on the mend. >> the offset to that boom in china in the first quarter of the year is closing in on the debt ceiling talks and sequester cliff. the fact of the matter is, through march we could see rocky roads ahead. how do you position for what could be some tough sledding? even if overall for the year you're net positive? >> what we would say is in the near term, what we always suggest to investors is that when they're looking for cyclicly exposed stocks, they look for dividend payers. it's nice to get paid while you wait. we're not looking to stretch for dividends, but get some dividend. we want stocks that believe in the premise of the company. we like the leadership of the company. >> what kind of valuation of the
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stock would you like to see? we've seen a massive run-up in some of those stocks. analysts cover their own sectors, some sectors like tellcom, trading at historically higher valuations. >> melissa, i would agree. they were our underweights for last year. we were not quite right in terms of telecomes. >> what you describe is the dogs of the dow type idea, where you buy the membership of the dow that performed the worst during the year before, and therefore, the dividends tend to be higher on the basis that they rebound. that strategy failed in 2012. >> i'm just saying, we didn't like telecomes last year. what we like are cyclical stocks, whether it's technology, industrials, materials. >> let me ask you how strongly you believe that. because you gave brian a long list of reasons why everything would be okay this year.
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but you started by saying that you felt that the recovery in the united states was quite sustainable. >> yes. >> do you with huge conviction believe the american economy is sustainably recovering or is it quite sustainable and could be put off course? >> i think anything can always be put off course. we were certainly concerned going into the weekend. but when we saw a distinct change from both sides of the aisle, actually being able to come to some sort of agreement, albeit it doesn't fix everything, but to be able to -- >> it doesn't fix anything, really. does it? >> i certainly think that it does relative to taxation, when it comes to those draconian levels that were going to hit everyone, from the lower economic scale up to the highest. >> but on monday they said in return for further entitlement spending cuts, he wanted further incoming improvements. this discussion on tax isn't over as far as obama is concerned. it will go on, and it will now be about deductions on the rich.
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>> simon, i'd have to say, it's almost inevitable based on the situation. we have to reduce spending, and we have to increase revenues. that remains the same. but progress has been made, and i'll take progress any day. >> in terms of your picks, honeywell, like home depot, lowe's, you also like international markets. what sort of weighting relative to the u.s. would you place in international markets at this point? >> i would say, melissa, it depends on the individual investor. but we'd have to say that for a professional investor, who is a globalist, the likelihood of being 50% u.s., and then split the balance of the 50% that is related to equities, in that position, to international markets, split pretty well evenly at first between developing and developed. so you want emerging markets and developed. you're hedging a little bit there. but both of these markets just
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last year really came back in terms of performance, in terms of the regional markets. and we would expect we've got more room to go. >> one black swan wild car we could have this year, john. >> one would be some kind of disaster related to the debt ceiling right away. that would be -- >> you say it's black swan, implying it would be extremely unlikely -- >> i call that a typical new york city street pigeon, pretty common. >> i think what i have to say is, just look at this weekend. it was a close call. but at the end of the day, they squeaked through. we squeaked through. >> what we saw over the past few days pulls out washington? >> it makes me cautiously optimistic that perhaps after 20 years of total polarization, perhaps they'll be able to have lunch together. >> wow. >> we'll see if that meal happens. john, good to see you. happy new year. >> happy new year to you. >> we're going to have lunch and we'll have swan. it will be delicious.
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>> thanks, brian. >> as you know, what exactly does getting over the fiscal cliff deal mean to the health care center. jackie? >> good morning, melissa. now that washington has been able to come to an agreement to avoid the cliff, the health care sector can take a sigh of relief. the $600 billion in tax increases and spending cuts that posed a threat to health care stocks has been tabled for now in that 2% cut to medicare reimbursement that is scheduled to take immediate effect will not. several subgroups within the health care industry were at risk before the deal, including the health care providers. that's the hospitals, nursing homes, the long-term care facilities. the government is a big payer to those providers and the reduction in spending, reimbursements, could have had a sharp impact on their bottom line. tenet health care, hca, universal health, vanguard health, they could have faced deep declines because of this. the health insurers were another group at risk. reduced spending, eliminating
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tax exclusions would have meant insurance premiums could have gone up to compensate. companies like united health, aet aetna, humana, well point. and don't forget about the companies on the cutting edge of medical technology. with less to spend potentially, hospitals probably wouldn't have made some of the same kind of investment in their products. so companies like intuitive surgical and medtronic, they were stocks investors were watching closely. that said, the sigh of relief may only be temporary while spending cuts won't take immediate effect, they will be revisited down the group. so this sa group we really need to watch. >> jackie, thank you very much. let's get more perspective from someone on the front lines of the industry. here in a first on a cnbc interview, jonathan bush, chairman and ceo and president of athenahealth. welcome to the program, sir. >> good to see you there. nice to have you have me on. >> within the deal that we have, and it sa long deal, over 250
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pages, we're not going to get the cuts on the medicare physician payments, which a lot of people were concerned about. but in order that the doctors don't get their income cut, it would appear they've done a deal to effectively rob the hospitals in order to pay for the fiscal cliff fall. that certainly had the federation of american hospitals, as putting it, specifically there is a repricing of end stage renal disease payments, to save $5 billion, and other measures within that, that could make the hospitals worse off, whilst the doctors keep their payments, again, for just another year. how do you feel about the deal? >> well, i think the subparts of the deal are really fairies cansing on the head of a pin. it's a $600 billion problem. while renal gets danced over here for a while, the fact is, it was just for another year.
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the administration is working on executive branch side programs to stimulate more of a creative approach to the way people are cared for. but by and large, i feel like the health care piece of this was just a more accentuated version of the same kind of river in egypt, the denial, that is. >> for those who do want more, for the fiscal conservatives who want to get deep into the industry, and stop the health care industry filling its boots, frankly, at the taxpayers' expense, particularly for the people who are dying, what should the approach be from your vantage point? >> well, i think it's very clear that we have insulated the patient from the choices that are available to them. by making kind of an all you can eat buffet benefit design with medicare. and medicaid. that's got to stop. there is the medicare advantage plan program. the obama administration has
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started the aco program. but some way of returning to this american gift we have of, we are fanatic shoppers. but we don't shop for our health care. and as a result, we don't really like it, no matter how much it costs. >> are you with romney and paul? >> well, i'm more with wyden than romney and paul. but anything that allows doctors to shop, people to shop, employers to shop more widely would create a wider range of programs. some more expensive, and some a lot more inexpensive. that's what health care doesn't have right now. >> jonathan, brian sullivan. why is american health care the most expensive in the world by a long measure? >> because the consumer is not in it, and the government is not in it. you don't have a socialized program where some committee in washington says, this is what we're going to do.
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and anybody who doesn't want to go this way can go somewhere else. people need to shop and say, i want someone to take care of me when my tractor rolls over on me. >> i'm going to ask this anyway. what way do we have personal responsibility on health care in this country? >> we absolutely need it. we absolutely need it. it doesn't matter if you're left or right wing. because it's not just the cost, it's not just the people getting hip replacements that they don't need. but it's the satisfaction. we actually feel disconnected from the fruits of this expensive labor that's done on us. it's not satisfying. so we need it. and it's going to be doctors we think that do the first wave of shopping. they'll get in there and get into savings-based programs where if they choose the right mammogram, or choose to use mammograms more to use mammograe conservatively, they'll make money and that's what the next generation of opportunity in health care is and as the doctors get good at making money
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in shopping, then consumers will have money to takeover years down the road. >> we saw a huge drop off in your stock in the third quarter when you posted your most recent results and part of the reason for the revenues was the delays i implementation and has that b problem been resolved as we teetered over the fiscal cliff? >> there's in question that as more and more power deinvolves to the central government, everybody gets a little tired because if one guy moves, if this one central power decides to delay or make things more complicated, it affects everybody, so stocks like ours move you know, in bigger strokes as the government wags its tail feathers to and fro.
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athena is at a high multiple, so a mouse cutting a fart in brazil will affect our prices dramatically. >> i guess the question now, is that mouse in the united states? how are we going to see that gyration in the most recent quarter that probably just closed because of of the fact we went all the way to the brink. >> right. >> because if i'm connecting the dots, jonathan, i would assume that if you saw the hesitation through the third quarter, you would have seen more hesitation in the fourth, which would make me more concerned as an investor. >> i think there are short-term toings and froings based on people reading tea leaves. athena health is the only cloud based service. we're the only ones who can respond to all these changes in the rules, so as those changes in rules become more profound, more doctors, more care givers, more hospitals are going to need to get on to the cloud.
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>> jonathan, good to see you. thank you for spending the time. jonathan bush there. chairman, ceo and president of athena health. >>. >> financials, there's your chart of the financials today. up 2.2%. let's end the year right now and go out with gains. how about it, guys? >> gains of 2%? that would be a great year. i think not. >> matches the tax hike. >> we're talking financials, straight ahead. [ female announ] today, jason is here to volunteer to help those in need. when a twinge of back pain surprises him. morning starts in high spirits, but there's a growing pain in his lower back. as lines grow longer, his pain continues to linger. but after a long day of helping others, he gets some helpful advice. just two aleve have the strength to keep back pain away all day. today, jason chose aleve. just two pills for all day pain relief. try aleve d for strong, all day long sinus and headache relief.
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welcome back. third hour is always my favorite. brought my golf club today. we witnessed the first round of a very important golf round. this foursome had no hope. this was a real scramble right from the beginning. we had mcconnell, boehner, the vice president and the president. and they weren't the team. the president said you know, i'll swing first because i'm
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fwoipg to play this one but i don't think that's true. i think he was going for the green the whole time and boy, he put it right in the hole. country's a lot more in the hole than it was. it was the ceo who yelled four trillion more in debt over ten years. i think that's pretty much over what happened. the cbo a new score in general, but that foursome really thinks they won. but i think the handicap's gone up. it's just going to get hotter and hotter to play the back nine. the next big issue for the back nine is definitely going to be the debt ceiling, but the president says you know, that's out of bounds. but i think it's going to be a rough. we're going to be playing in the rough on that one and he's going to be forced to drop the ball if bounds and we're going to see how this back nine plays out because instead of just the foursome, i think we need to
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have a bigger play of golfers showing up. there was a lot of golfers elected to play in this game. hundreds. but really, they never got a chance to be teed off even though they might have been teed off. no matter how you slice it, the country really needs to address the debt, so this golf game is going to get much more interesting in six to eight weeks and we'll come back and handicap and hopefully, we'll have some hope with us. back to you. >> i thought "the washington post" put it quite well when they talk about this bill that went through when they say it's everything that the tea party hates. too rushed, too bloated, too secretive and too expensive. >> we're going to go from teed off to a tea party and i think that will be coming soon, simon. very profound statement on your part. >> rick, thank you very much. we're back in two. welcome to chevy's year-end event.
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>> the business community can play a role by not giving one penny, not one penny to any politics that won't sign up right now for specific entitlement change us. >> what do you call 47 millionaires sitting around watching the super bowl year after year? the philadelphia eagles. >> i know no one liked the deal. okay, that's what happens. that's what -- you're not supposed to like a compromise deal. >> do you see a more vitriolic fight over the debt ceiling than over the fiscal cliff? >> yes. >> can you gif us a reason to be optimistic? >> i cannot. >> we do need to start narrowing this deficit. right now, it's really a push. i didn't see really much of
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anything happening except a sway out of the headlines and the stock market. good morning, happy new year. we are live here at the stock exchange. take a look at these numbers. this is the dow's biggest first day gain in at least five years, adding 248 points right here in the first hour of so from trading. s&p adding 27 and the nasdaq up by 2.4%. for the nasdaq, it is the biggest intraday gain in six months and many sectors are trading at 52-week highs including transportation, industrials, as well as the defense stocks as the sequester is averted. take a look at apple. certainly bouncing back from some pretty substantial losses over the past few months. the next web reporting that the tech giant is testing hardware
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for the iphone 6 and is working on the new version of ios 7. if there is a pocket of weekness, it is the retailers. ann taylor from a hold to a buy, also taking skull candy down. all three of those stocks in the red. >> good morning. if you just joined us, let's get the red map. markets seeing a 2% game. is it fiscal cliff euphoria or a bigger signal that 2013 is the year for you to get back into the game if you're not presently in the market? we'll bring in many strategists to review what's likely to happen over the next 12 months. avis is buying zip car in a $500 million deal. find out what the deal means for the highly competitive car rental market. plus, banks ending 2012 with a bank and heading into the new year with more gains.
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is it a sign to buy the banks in the new year? we'll tell you how to buy the sector. and the fiscal cliff, republican congressman vern buchanan and democratic congressman sandy lev it will join us to talk about america in 2013. so, the markets soaring so far on the first day of trading for the year. let's get some analysis on where we stand. ed yarden is president of yarden research. >> it's wonderful. i think with the benefit of hindsight, we could have said the market would be either up 300 or down 300 today. up is a lot bert than down, that's for sure. >> where do we dpo from here? zpl i think higher. this bull market since 2009 really has been a series of relief rallies following apock liptic end of the world corrections that turn out not to really work out that way. >> you had to have had a strong stomach to stick with the markets the whole way through
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given so many prognostications of the world essentially coming to the end along the way. so, in terms of looking out this year and seeing the potential pitfalls and potential points at which you've got to just dig in and stick with it, i mean, talks about the debt ceiling and spending are coming up in two months. >> sure. this bull market really has been headline driven all year long and most of the headlines are focusing on what governments are doing arnold the world. we've got the with best governments money can buy. none of these politicians want to cause a depression. quite the opposite. they seem to always be figuring out ways to stimulate the economy. i don't think the fiscal cliff issue is going to hit us again that hard in february and march because politicians have been there. they know how painful and ugly it is. the reason we got this deal, they don't want the stock market to take a dive.
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they're sensitive to what thai doing and its impact on the stock market and economy. and the economy is actually looking pretty good, so why get in its way? >> that's true. to make the comparison once again to 2011, what happened with the s&p downgrade, that issue was specifically the debt limit. the debt limit issue is still on the table. >> and the locket could start to swoon on that. at the end of the last year on this, i mean, everywhere i went, everybody was talking about the downside of the fiscal cliff. i did actually the opposite and i talked about the upside if we actually postpone it. i don't think we've actually fundamentally solved it. >> on the one hand, you're bitterly cynical of what's happening on capitol hill. you told us -- >> i'm not bitter. >> the best congress money can buy. does that make the rally -- >> guilty as charged. >> does that make the rally less real or is it still real, it may be overstimulated, but i still buy it, it's real, tangible and
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safe. >> i think the reason it's real is because the earnings are there. we earn about 100, $102 a share for the s&p last year. the most important thing about the fiscal cliff is we're going to have all these huge tax increases for everybody. that was the biggest part and that's behind us. so i think we can look forward to the economy actually doing surprisingly well. not just on a relief rally in the stock market, but a rally in consumer confidence and spending. >> thank you very much. happ happy new year. >> okay. we are getting comments from goldman sachs' ceo on the deal. he says this agreement is a step forward to injecting growth and investor confidence in the u.s. economy. more progress clearly will be needed, particularly when it comes to restraining the growth of government spending. today's announcement lays the fo
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foundation for more economic growth. well, with the deal in the books keeping the country from going over the cliff, what comes next? eamon javers live in d.c. with that. >> we just got a lurching from calamity to calamity here in washington. take a look at what people are calling march madness. i prefer to call the ides of march because it's more high pha fluting. you see that we've got a debt ceiling fight. treasury department says they can go another maybe two months. that puts us into march on the debt ceiling. they didn't totally deal with the sequester. they kicked it down the road for another two months so there's going to be a fight over that. maybe at the same time as the debt ceiling. that's going to feel like the fiscal cliff all over again. then you've got to continuing e resolution. the spending measure that funds the government. that will expire, so we will have a fight about a potential government shutdown at the end of march. so the beginning and end of march are going to be really
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dicey here in washington and this is not over yet. the fiscal cliff deal, a little process, the president hasn't signed that yet. he left for hawaii last night before the bill got down to the white house. that thing is not in the history books just yet. >> eamon javers, thank you. could the deal in place have some consequences? let's bring in bob cusak, managing editor at "the hill." are we heading to fiscal cliff 2.0 in march? >> we're just getting started. ipg the debt ceiling is going to be a massive fight. the white house signalling it's not bargaining with republicans on that. anymore after that ugly 2011 fight. senator lindsey graham yesterday, he said you want to bet on that? they think they have a lot of leverage in the new year. the republicans had little leverage in 2012 after the election and basically, the white house got a lot of what
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they wanted in this deal. but there are many, many debt battles and i think the credit rate i rating agentries are the x factor here. congress has a way of saying we're going to cut later. once again, they've done it. >> yeah, we've already had some analysts out there saying that the odds of a u.s. debt downgrade has increased in their view from 20% to 10%. but at the same time, bob, in terms of how the most recent talks have gone through, are you more optimistic or less? >> less optimistic. i think the parties -- this was another brutal fight and now, both party rs saying something very differently. president obama saying he wants more revenue. he wants to go after the tax loopholes and republicans are talking we need trillions of dollars in cuts. so they are very, very far apart and we've got about two to three months, maybe six months, as far as the downgrade.
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i think the credit rating agencies may give congress a rit l time. >> let me draw on your experience and knowledge of what is going on now within the gop, specifically in the house. you know, it hasn't extracted entitlement savings here. they didn't get the spending cuts that we would have expected the gop to deliver on. what are the ramifications of that for speaker boehner, for the strength of the team, for the unity of the pledge? >> that's a good question. i'm not sure. they're going to have to pick up the pieces. obviously speaker boehner tried to pass his plan b bill. they lost a tremendous amount of leverage on that. a month ago, we were talking about house republicans said they want $2.2 trillion in cuts. and now, we have this bill that really didn't have any significant cut what is so ever. i think republicans are going to have to re-group and decide how they're going to move forward together because they are just so fractured. you have at least 50 defections
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on the republican side on any big bill that comes to the house bill and if democrats don't want to pass the bill, well, then, the bill won't pass. >> that would suggest that the fiscal cliff could be lethal. >> it could be. definitely could be. and i think with any bill, any big deal on tax reform or entitlement reform, it has to be bipartisan. the only big bill that i've seen that has gone through with major ramifications was obama care and that got narrowly by a democrat in the white house. otherwise, the party's going to have to come together. we've got immigration reform, possibly gun control. a lot on the plate. >> thank you. >> let's get a market flash with brian shactman, the dow up 230 points. >> simon, we got a deal. the ten-year note rates are to the upside and life insurers strongly to the upsite. met life and lincoln national,
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number two and hartford is is number four. so, strength across the board in this group. of course, sellers of variable annuities getting a nice pop. 3% and up. >> avis is buying zip car. what does that mean for the rest of the rental car market? find out next on the show. and later, we'll hear from both side of the aisle on the deal and what it means for the feature. republican congressman vern buchanan and sandy levin will join us live. and also, rick santelli working on the third hour of sidewalk on the street. >> we're going to ask him we're now about 44 points off the highs in the dow jones industrial average. will this euphoria last? how long and will the rest of the year be represented by the first half of january? all important questions, about 20 minutes tr now. be there. ♪
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welcome back. one of the big ones people are talk about today, avis buying car sharing innovator, zip car. price tag, $491.2 million. works out to 1225 a share. a 49% premium over where it closed monday. during the conference call announcing the deal, avis ceo
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admitted he now gets it. he was wrong when he came to car sharing initially. people were saying this is the niche business, well, it has 736,000 members renting by the hour. it has aggressively expanded the past year on college campuses. the rub, look at zip car shares since the i p po in 2011. down basically 50% because they've been inconsistent about generating steady earnings. and compare zip car versus shares of avis. the symbol being car. they have diverged greatly within the last year. there you have it again. avis buying zip car. $491.2 million. guys, the bottom line is this. when it comes to the rental car companies, the new battleground is in the car sharing arena and hourly car rentals. >> the important point to make
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here also is that one of the reasons that zip car is down is because the big players, avis is not the big player, it's enterprise. was pooling its bonds and was going to make a major push. zip car has first mover advantage. the question is can it sustain it. >> they do. also, this is a very small market, simon. people are looking at this saying outside of new york, san francisco, chicago, are you going to get somebody in memphis who's going to want to get into the car sharinging business? maybe a few, but not a lot. >> thank you. coming up next, vern buchanan tells us why he voted yes on the deal and banks turning out to be the best performing sector. two top names, paul miller and david katz here to weigh in. much more straight ahead. nc ] ], we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations,
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fiscal cliff. representative vern buchanan of florida is a member of the house way and means committee. great to have you on. >> it's great to be here, melissa. appreciate the opportunity. >> why side with the democrats? >> well, i don't look at so much the democrats. it's the largest tax cut in the history of the country. $730 billion. this is a tax cut for 99% of the people. i thought it was the right direction, otherwise, we could have gone over the cliff. everybody's taxes would have gone up. i had a person call me last week, one of many. i'm making a hundred thousand, add another 5 to 7% of taxes would allow them not to do a lot of things they would like to do this next year. wasn't a perfect bill. the big battle over spending will come up this 60 days and we're going to fight and draw the line in the sand.
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>> congressman, it is fascinating to watch your frame what happened as a tax cut. this is a tax rise on anybody earning over $400,000 a year. you have broken your tax pledge, have you not? >> no, i haven't. not the way i look at it. even some of the outsiders have said that i haven't. i think the bottom line, it did happen after the first of the year. now, playing with that in terms of the timing issue, but if we did nothing, taxes would go up on everybody. this brings some certainty to the code in terms of capital gains and dividends, so i think overall, it's not perfect. it's not the way i would have put it together necessarily, have the spending cuts in there, but i think it's the right thing for 99% of people in america in terms of taxpayers and i think it brings certainty to the narcoti markets and we live to fight another day in terms of the debt ceiling. >> it's quite clear. the majority of the country is
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with you. 65% in the "wall street journal" poll wanted compromise, but there is the hard core of your party to which you have to appeal for who you have not done org bly what they elected you to do. if grover norquist was here, he would say the greatest thing we're able to promise people is no further tax rises. it was the major mistake that bush sr. made when he said read my lips, no new taxes and then broke that pledge. what will you then say at the next election when this issue comes up? >> again, i think i held taxes down to 99% of the people. if it went over the cliff, we would have had to deal with it and then had a tax cut. i think just plain in terms of terminology with each other, but the bottom line, 99% of americans are going to get a tax cut. $730 billion. again, wasn't exactly the way i'd like to see it go down because i'd like to see a spending aspect of it. 49 out of 50 governors, that's
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what i'm going to push for, but we'll have that spending battle, which is the real issue going forward, but we did bring certainty to some of the tax code. i know a lot of small business people are excited about that. >> it is the real issue, congressman, and it could be the more vitriolic battle on capitol hill. do you feel by siding with the democrats this time around that somehow, you gained leverage to fight that tougher battle as you say? >> i think we get the revenue component off the table and then fight on the spending side and i can tell you as a conference, i think it's 99.9%, this is going to be real battle. we're going to draw the line in the sand as it relates to spending. this didn't have the spending as pecht in there. the se quest tradition for 60 days. that will probably minimally kick in because we're not going to stand for it, but we've got to bring certainty to our debt. >> even if arguably you drop the
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ball on entitlement reform, there is no entitlement reform in what you voted for. >> again, we're going to have a bite at this apple in 60 days. we're going to work aggressively on trying to get a balanced budget amendment or substantial cuts. i think the president knows we need to deal with this in an aggressive way. we can't continue to run trillion dollar deficits. but 89 senators voted for it. mostly republicans in the senate and thought it was the right thing for today and we'll fight that battle the next 60 days on the spending cuts. >> thank you for your time. vern buchanan joining us today. the rally strong off the highs of the session. the s&p 500 was up seven points higher from where we are now and the ur o has turned negative. risk currency is turning negative. these are just things to watch. we're just minutes away from the
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close in europe. we've got all the details, right after this.
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europe closing out on the first trading day of 2013 with a lo of deep green on the screen. just check out the figures you see here. the dow here is up one and three quarter percent. do you see how some of those european markets have done even
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better? some up 3.5%. the reason for that is because they are playing double catch up on the fiscal cliff gain. many of them were closed on monday, so they're catching up on the gain that you have on the dow here. 166 and the gains you have today on the wake of that deal in the fiscal cliff. arguably, the data are still poor. recession is really the name of the game. but you have a risk rally around the world and you see it there in europe because of what has emerged here in the united states. also, the data from china. it's a modest increase in manufacturing in china, but it's enough in particular to lift some of the mining stocks. you can see that o at the top of the 600 top blue ships in europe. they are being led by those mining stocks, those big australian miners quoted in london. glencore up over 7% and the financial sector is also doing well today. you see it on this side of the
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atlantic and you see it in europe as well. what's interesting is it's the periphery of europe that is really rallying those. you see spanish financials doing particularly well today. led by the asset manager up over 18.5%. and the italian financials, that other critical market also doing well. the insurance giant up over 4%, so it is a big, broad rally in europe today on good volume in the wake of that deal done to avert the fiscal cliff here in the united states. back to you. >> time now to check the moves within the energy and metals market. check in with sharon especiallier son. >> we're looking at u.s. oil prices, the wti contract was at the highest levels since september. above $93 a barrel and it's
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broken through key technical levels. the same is true for brent crude. the next level to get to in terms of resistant above $113 a barrel. we're also seeing gains even in the gasoline futures and that comes on a year that saw the highest retail gasoline prices on average. $3.60 was the average price for 2012. we're looking at 2013 starting off around 3.29 a gallon. aaa is saying we're going to see gas prices that are probably a little cheaper than a year ago, but still, rather high. we're seeing a big downturn here in natural gas. bucking the trend from where other commodities are standing. prices hit a low of $3.05 and some traders saying it was just below trading activity. others say look at what's happening to the weather forecast a week or so out, where
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we're going to see very much above normal temperatures for much of the country. and then take a look at what's happening in the metals market. that is where the momentum is, particularly in silver. we're looking at a 3% gain there in the silver market. traders looking at the fiscal cliff deal being averted. back to you. >> thank you very much. now let's check in with bob pisani and we are off our session highs, but still up strongly. >> yes, and it's a fwraet gain. this is the first day of the year and traly, the first day of the year sees nice gains. take a look. let me show you what the last four years on the first trading day have looked like. 201 was up 1.6%. okay, so we've got a nice gain today. it's nearly 2%. but it's not far from the historical averages. i think of course the fiscal cliff deal made a difference. there are other factors coming into play. a lot of old things in 2012
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didn't work very well. whatever happened to the idea of sell in may and go away? look what happened in the first quarter of each year. member sell in may go away? that means sell in may, june, july, august and september. the third quarter was up 6% and what happened to oh the best sequence of the year is november, december and january. the s&p was down in the fourth quarter of last year. i keep bringing this stuff up to point out that a lot of these old wives tales don't work very well anymore. with that said, i can't, i'm amazed how many people are telling out of bounds into stocks in big, big, kinds of ways. everybody's predicted bond rallying is going to end. this time last year, that was exactly what everyone was talking about. wrok on that. but i think there might be some reason to think it might be coming to an end. shell gas is going to help us out and strong corporate free
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cash flow. those are the arguments. more on this later. let me show you what's move iin now. new highs, historic russell. new highs on the mid cap. the dividend, etfs strong today. 20%. less than some feared. coal stocks up. china had good economic data. we saw some of the markets up here today. those are gaming stocks. they were up on big data out of macaw. las vegas is strong today. bonds, long-term bonds. this is the tlt and here's something, i get a lot of questions about why the heck are solar stocks so strong. there's a lot of renewable energy credits in this thing that nobody is talking about. there is a production tax credit extension in the bill for renewable wind plantds. yes, there is. so wind is doing strong. some of these companies that do power plants help that are going to generate from wind forms are
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doing strong here today. there are some other provisions in here. here's why the solar stocks up and i think the solar stocks are up, even though there's no specific tax provisions. finally, the last one here, that's darling. they do cooking oil refining. cooking oil renewing for various companies. there's a biodiesel tax credit that's going to help some of these companies, so that's why these companies are on the upside. >> the bill is 153 pages. >> a lot of stuff buried in it. >> as one republican put it, there's a lot of pork in that. brian shactman, back at hq. >> there always is is, simon. what is the best performer in the s&p 500 today? u.s. steel. credit swis upgrading to outperform with a $30 price target.
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they've pretty much raised the target for every stock in the sector saying they're set for a bounce amid this fiscal cliff so-called resolution, back to you. >> thank you very much. let's go to rick santelli in chicago. hey, rick. >> hi, melissa lee. happy new year. happy new year to dan the man and as a floor trader, i look up and see that the dow is still above 200. i think that the euphoria is going to be short lived an there were people a couple of weeks ago think thag the good solution with worth a 10% rally. i guess i don't on either side. >> you just said a good solution might have been worth a 10% rally. we don't have a good solution. we have a solution to the tax end of it. we've got structural spending problems, but they're not addressing them and that's what is going to face this country in two months. rally today, maybe not as high, but it will stay.
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once you start looking this thing -- >> what comes out tomorrow morning? >> adp number and friday, employment. >> talking reflect this deal, but they're still going to be soft. 150,000. we're going to have a new friend on friday. welcome, ben bernanke. like dan the man and myself, we're going to be looking at that participation rate. i don't think ben's going to want the lower rate to be driven by issues that are economically sound. >> i think you're right. the one thing you have to pay attention to, what if we start stronger numbers. >> i hope unemployment goes down, participation rate goes up. now, i'm going to hit in another arena. i love simon and simon was given one of the republicans a hard time. and i understand that. hey, where was the entitlement reform? where was the media asking about it last night? >> we hadn't heard anything.
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>> these fiscal conservatives, maybe they're not as good as the president. they are the best. at playing political chess. >> yes, they are. >> it just unfortunate there's very little correlation between winning the chess game of politics and winning what's best for the country. >> you win a battle here, but what about the long-term war here? >> they're not winning anything right now. i'm so disgusted right now. it's what's been going on in our country for the past four years. the leadership void is still there. we're not get geting the things done and this is on both sides. everybody's to blame, but one person has to have responsibility. someone has to bring people together. it's not happening and it is sickening. >> it's like a kindergarten class. all the kids get together and say we want to stay up an hour later, drink 22 ounce sodas, heck with mr. bloomberg and the teacher said okay, because you asked for it, you got it. that's what politics is.
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i think kindergartners probably draw better than politicians. >> i think we're doing a disis service to kind garters across the world. >> thank you. banks some of the biggest gainers today. financial sector trading at the highest levels since march of 2011. the question is, will the momentum continue? find out which financial stock could bring you the most profit in this new year and later, you heard from a republican, so now, a democrat weighs in. congressman sandy levin weighs in on the fiscal cliff deal. back after a quick break. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan. tdd#: 1-800-345-2550 with the new global account from schwab, tdd#: 1-800-345-2550 i hunt down opportunities around the world tdd#: 1-800-345-2550 as if i'm right there. tdd#: 1-800-345-2550 and i'm in total control because i can trade tdd#: 1-800-345-2550 directly online in 12 markets in their local currencies.
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that's health in numbers. unitedhealthcare. leon cooperman crushed the market in 2012, now, he's here live with his winning plays for 2013, plus, traders list the best stocks to buy and hewlett-packard. can 2012's biggest loser turn into this year's winning trade? happy new year, back to you. >> that will be interesting. scott, thank you. we have breaking news out of washington with eamon. >> well, the president's putting more pressure on the house of representatives, which remember left last night without passing a multibillion dollar sandy relief bill for new york and new jersey and the affected areas hit hard by that hurricane. that has prompted outrage among republicans and democrats from that area who say that the congress should act today. now the president adding his voice to that with a statement
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saying in part with when tragedy strikes, americans come together to support those in need. i urge republicans and the house of representatives to do the same. bring this to a vote today and pass it. now, speaker boehner, who had not intended to bring that measure to the floor today does have a meeting today, but also, we're going to see a press c conference coming up from chris christie at 2:00 p.m., obviously a fellow republican x is the politic of this are not done yet. the unclear, but there's a real stand off on that sandy relief bill. >> to many people, it is outrageous they didn't find the political oxygen to push it through, but there's too much pork in the bill, that there's stuff there that shouldn't be there. how real is that criticism for the gop in particular? >> well, it's certainly real. there's always stuff in there that shouldn't be there.
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a lot of little things that manage to find their way in there. the trick here was the optics of trying to do a big spending bill the same night they were trying to do a bill related to debt and deficits. they may have to revisit that before the end of the day today. >> thank you. financials were the best performing sector in 2012. they are trading at levels not seen since march of 011, so what is the bank trade? david katz, paul miller an analyst. paul, i'll start with you. happy new year to you both. paul, in terms of the financial landscape, does anything change with this deal? >> not necessarily. i think what really needs to get these banks rolling is a good gdp growth. what the fiscal cliff did was slow down that expectations into the new year, but right now, we think these financials are fully valued, but if we get solid
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economic growth, unemployment rate drops, you're going to see these stocks go higher. however, we need economic growth in 2013. >> david, you've been a long-term investor in financials. at this point with financials, some of them have doubled in 2012. like bank of america. do you want to lighten up and then re-enter a position at this point? >> we think we're very early in the financials doing better. you have to put 2012 in perspective. 2011 was a horrific year for financials, even though the fundamentals and earnings were coming back, so we thought they would start to catch up in 2012. we think the fundamentals continues to get better over the next year. the whole housing market is a big plus. one group that did not do as well within the financials were the sensitive stocks, stocks that were being hurt by very low interest rates. we think rates are going to start to tick higher. that's a place where we think there's going to be some
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catch-up. companies like met life, even though financials did well. >> and paul, i'm wondering if that threat of interest rates going higher could actually be a tail wind for the likes of bank of america or a bank that originates a lot of mortgages. could it move consumers off the sideline to get more loans, to apply for more loans and be good for business on top of what looks like mortgage reduction is in tax still. >> well, the names that are really going to benefit from higher rates are the zions and coamerica. those are the ones you want to be in if you expect rates are going to go higher. we'd like to pure plays on the foonl side. the flag stars and phhs. a little bit smaller, but we think the mortgage market is where you want to be. >> you know, just a broader points about the market. we had jim paulson on from wells at the end of last week and he made a very important point that
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there's a possibility in 2013, because the world will be safer for investors, that the market rerates. in other words, for every stock, it will be willing to pay a much higher pras because the earnings stream for that stock is much more secure and i imagine that might be particularly true possibly of financials. you said we were fully valued. do you think we could reraised? >> that is a big debate out there. i don't know if invesers will value the safety of these going forward. right now, what people in the market like is growth and right now, financials do not deliver growth. yet they were cheap in 2011 and bounced back a little bit, but there's still a lot of issues with financials. low rates and poor economic growth is not going to lead to larger balance sheets. if you don't get growth, i don't see these things moving much higher. >> gentlemen, thanks for your time. >> straight ahead, sandy levin on why he voted yes to the fiscal cliff deal and what congress has to do next to get
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with lawmakers reaching a budget deal tuesday, that averts the fiscal cliff, what is the next big fight on the horizon? representative sandy levin of michigan is ranking member of the house ways and means committee and he joins us live. welcome to the program, sir. thank you for sparing the time for cnbc, congressman >> glad as always to be with you. thank you for having me. >> what did you think of the
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fact that the vote went through finally in the house last night? >> i think it had to be done, if we had gone over the cliff it would have been major economic consequences. as i said in my opening statement, not really only for the u.s., but i think beyond, because we're the leading economy in the world at this point. >> sure. >> so we really had to act and i think it was a step forward but as you've been discussing, there are further steps ahead. >> you know, many people are bitterly, bitterly disappointed. i have a statement from erskine bowles and alan simpson, co-founders of fix the debt, they say congress knew that this cliff was coming for a year, it was set up specifically to deal with the long-term problems that america has with its debt, it should have forced politicians to do a bigger deal and yet we were taken to the brink of disaster and still there's no entitlement spending cuts in what we have here.
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this has done nothing but make the debt situation worse. >> i think it would have been worse if we had gone over the cliff. i think the impact on our economy would have been very, very serious. economists said that we would have lost a couple points in terms of gdp. cbo, the congressional budget office said we would have lost three percentage points in gdp. >> congressman, two-thirds of the population didn't want to go over the fiscal cliff, that's clear, but you could, as democrats, have put entitlement spending in the deal. you know the republicans, the republicans gave way on raising taxes on the wealthy, why did you not meet them further along the fields in what america needs, and you know it, which is reform to entitlement spending? >> look, the fact of the matter is that the president sat down with the speaker and they worked on something that was larger, and what happened? the speaker walked away from it. so it isn't the president who
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hasn't been willing to talk about a larger package, nor those of us in the house or the senate on the democratic side. it was very difficult to negotiate when there was a partner, and you weren't sure whether they were in or out. i think hopefully that will now change. >> so congressman, when it comes to the next two big issues that we have to deal with, the debt ceiling and spending cuts, are you more or are you less optimistic that there will be compromise reached, because given what the white house has said after the most recent negotiations, given what republicans are saying, it sounds like the two sides have really dug in their heels at this point when it comes to these very important issues. >> i urge everybody to listen to what the president said a few days ago, that we are going to tackle the larger issues but we have to do so in a balanced way, a reasonable way, but balanced and that means looking at spending cuts and looking at revenues. we have to do both.
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>> congressman, with respect, he has hardened his position overnight. what he actually said was as far as the debt ceiling was concerned, he was offering zero spending cuts effectively. he's hardened his position within the last 24 hours. >> i don't know what you've been listening to or hearing, but the president said was he wasn't going to let the debt ceiling negotiation essentially take him and the country or try to do that over the cliff. he has never said he isn't interested in a larger package. he's been working on it. we're willing to work with the republicans, if we know with whom there's someone to negotiate, and i think last night, it became somewhat less clear. i'm still hopeful we can take on the larger issues. we have to look at everything but as the president said time and time again and he repeated in a balanced way. that means there has to be on
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the table program cuts, we have to look at entitlements, but we're going to have to continue to look at revenues, including taxes. it has to be balanced and we're dealing with a republican conference that to date has had too much imbalance in it. >> it's good to see you, sir, thank you for sparing the time to join us. >> nice to be with you again. >> congressman levin live from washington, thank you, sir. much more "squawk on the street" straight ahead. she knows you like no one else. and you wouldn't have it any other way.
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